Small businesses and HR professionals everywhere are planning now for health benefits in 2015. As such, there are five important questions to ask yourself as you begin to plan for health benefits. Doing so will assist you and your small business in bringing in a successful new year and can save you from simple mistakes.
Question #1 – Who Will the Health Benefits Program Cover?
To begin, who will the company offer health benefits to, and of these “eligible employees,” who will participate? Will everyone be offered the benefit (owners, employees, and dependents)? Or just certain staff (ex: full time managers)? Do employees already have coverage through spouses or other family members? Would they keep their current coverage if you offered benefits? Do employees already have coverage under an individual health plan? Are they eligible for, and receiving, health insurance tax credits?
As you begin to answer these questions you will identify two important metrics:
1) How many employees you will offer the benefits to (this impacts budget and strategy), and
2) How many of those will participate (participation could impact eligibility for a group health insurance plan).
Question #2 – What is Your Health Benefits Budget?
How much can you (or would you like to) contribute to health benefits? Consider monthly, annually, and long-term budgets as you plan for health benefits. Every business is different, but knowing your budget will allow you to successfully plan for the year. The cost structure of health benefits will vary by the approach you take.
Group health insurance plan: Monthly premiums are generally paid for by both the employer and employees. In most states, employers are required to cover at least 50% of the monthly premium for their employees. This is called a cost-sharing percentage or minimum contribution. Keep in mind what the company can afford, and also what employees can afford.Premium rates usually increase annually.
Individual health insurance reimbursement (i.e. healthcare allowances): The company sets the contribution amount and reimburses employees for individual health insurance. There is no minimum contribution amount. The plan could provide a flat $200/month to employees, and employees would cover any remaining amount of their premium. Or, the plan could provide $300/month to the CEO and managers and $150/month to part time clerical staff.
Question #3 – What do Employees Value Most?
Remember to discuss coverage preferences with your employees. Do they prefer full coverage at a higher cost? Do they prefer a high-deductible plan with an HSA? Would they prefer a healthcare allowance to use toward an individual health plan of their choice?
Similarly, what types of covered benefits are most important? While federal privacy laws prevent you from asking employees for information about their personal medical histories, you may still ask them about which kinds of benefits they consider most valuable.
Though you may not be able to meet all requests (set this expectation up-front), employees’ input will be valuable to your decision-making.
Question #4 – Who Will Manage Your Health Benefits Program?
The way you administer your health benefits program will have a substantial impact on both you and your employees. As such, who will administer the health benefits internally? What capacity do they have (time-wise, etc.) to manage health benefits?
Smaller companies often don’t have a dedicated HR team member. Rather, HR activities are part of a payroll, operations, and/or administrative role. If this describes you, individual health insurance reimbursement may be attractive because it takes 5 minutes/month to administer.
Question #5 – What are Your Health Benefits Goals?
Have you established reachable goals for your health benefits program? Additionally, what is important to you? What is a deal breaker? At the end of the year, what makes the program a success?
Establishing reachable goals sets your small business on a path for success — achieving the goals you set will ensure your success. Health benefits are a big deal for you and your employees, so make sure you take the time to ask questions, plan, and set goals.
Rick Lindquist, co-author of The End of Employer-Provided Health Insurance: Why It’s Good for You, Your Family, and Your Company, is a seasoned entrepreneur and president of Zane Benefits, Inc., the U.S. leader in individual health insurance reimbursement for small businesses. He is a regular commentator and contributor to leading publications, and his firm has been featured on the front page of The Wall Street Journal, USA Today, and The New York Times. For more information please visit http://www.zanebenefits.com and follow the author on Facebook and Twitter.